Is Former Dividend Aristocrat AT&T a Buy After Q2 Earnings?

The communication services sector is having a strong year. Its 11.41% gain in 2025 makes it the third-best performer among the S&P 500’s 11 sectors, easily outpacing the index’s 7.28% gain. It’s been a similar story for legacy telecom company AT&T (NYSE: T), which has seen its stock rise by more than 19%.  

That strong performance was bolstered on Wednesday when the company reported Q2 financials before market open. AT&T announced EPS of 54 cents, topping the consensus estimate of 51 cents, resulting in a trailing 12-month (TTM) price-to-earnings (P/E) ratio of 16.79.  

However, after breaking a 36-year streak of consecutive annual dividend increases, the company lost its Dividend Aristocrat status in 2022. Since then, its payout has held steady at 27 cents, down from a high of 52 cents in Q1 2022. But with strong forward guidance, is it time for income investors to reconsider AT&T? 

What AT&T’s Q2 Earnings Can Tell Us

When the company reported Q2 results, it announced:

• Revenues of $30.8 billion vs. $29.8 in Q2 2024
• Net income of $4.9 billion vs. $3.9 billion in Q2 2024
• Cash from operating activities of $9.8 billion vs. $9.1 billion in Q2 2024
• Free cash flow of $4.4 billion vs. $4.0 billion in Q2 2024

Looking forward, AT&T’s earnings are expected to grow 6.07% next year from an annualized $2.14 per share to $2.27 per share. Underscoring that growth is the stock’s forward P/E ratio of 13.30, marking a 20.78% improvement over its TTM P/E multiple. 

Looking at the company’s business segments, growth was seen nearly across the board. Mobility service revenues increased 3.5% year over year (YOY) to $16.9 billion. Consumer fiber broadband revenues were $2.1 billion, up 18.9% YOY. A&T reported 401,000 postpaid phone net adds in Q2, alongside 243,000 AT&T Fiber net adds, and 203,000 AT&T Internet Air net adds.

Icing on the cake, the telecom giant repurchased approximately $1 billion of its common shares as part of an enhanced shareholder return program that includes a $10 billion share repurchase authorization. On July 2, it also closed the sale of its entire remaining 70% stake in DirecTV, marking AT&T’s complete exit from the satellite television provider. 

The company expects to realize $6.5 to $8 billion of tax savings from 2025 to 2027 as a result of the Trump administration’s One Big, Beautiful Bill Act. That’s forecast to result in estimated savings of $1.5 to $2 billion in 2025 and $2.5 to $3 billion in both 2026 and 2027.

Wall Street Is Bullish Despite AT&T’s Diminished Dividend Status 

AT&T may have lost some of its luster when its Dividend Aristocrat status was removed in 2022. However, for investors on the hunt for a stock that provides both growth and income, AT&T’s current dividend yields 4.06%, or $1.11 per share annually. 

That’s something the smart money is already on to. Short interest in AT&T stands at 89.35 million of its 7.19 billion public float—or just 1.24%. Meanwhile, institutional ownership is 57.10%, with 1,996 holders having increased their positions over the past year compared to 1,553 that have decreased them. 

Much of that is rooted in AT&T’s competitive moat, which isn’t wide but is certainly well-established. The company faces considerable competition from telecom mainstays like T-Mobile US (NASDAQ: TMUS) and Verizon Communications (NYSE: VZ), but its proven ability to scale and retain customers has been critical to its recent success. That’s a large part of why AT&T expects its mobility service revenue to continue growing at 3% or better on an annualized basis. 

AT&T's wireless business segment is currently the third-largest provider in the United States. Additionally, the company’s communications infrastructure is expansive, reaching 290 million people in approximately 24,000 cities and towns. Since 2019, AT&T has invested more than $145 billion in the buildout of that network, including thousands of miles of fiber and 5G.

AT&T Stock Price Target and Rating         

All of that culminates in a consensus Moderate Buy rating, with 18 of 25 analysts covering AT&T assigning it a Buy rating, six assigning it a Hold rating, and just one assigning it a Sell rating. 

Looking down the line, the stock’s average price target is $29.17, or 6.04% potential upside from where it’s trading today. 

Where Should You Invest $1,000 Right Now?

Before you make your next trade, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.

Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.

They believe these five stocks are the five best companies for investors to buy now...

See The Five Stocks Here

The article "Is Former Dividend Aristocrat AT&T a Buy After Q2 Earnings?" first appeared on MarketBeat.